| Actual | Previous | |
| Index | 53.2 | 54.3 |
Highlights
The PMI for manufacturing slipped to 53.2 in July from 54.3 in June, its lowest level since 47.4 in February, but still remains in expansionary territory.
The production component fell 2.8 points to 54.2 while at the same time delivery times increased by 2.0 points to 62.9. Both come as no major surprise as the conflict in the Middle East continues to disrupt supply chains.
Order levels also decreased in July with the reading falling 0.3 points to 53.2, while inventories also contracted.
While the PMI for industry declined, services increased to 63.9 to their highest reading since August 2017. The increase comes on the heels of increased new orders and higher inventories.
Despite the decline in the industry reading, the sector still remains comfortably in and expansionary phase, but it likely to be tested in coming months as the conflict in the Middle East continues.
Definition
The SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) Association for Purchasing and Supply Management's Purchasing Managers' Index (PMI) is produced in conjunction with Credit Suisse. The PMI provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector of purchasing managers. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).
Description
The PMI is very sensitive to the business cycle and tends to match growth or decline in the economy as a whole. To construct the PMI the Swiss Association of Purchasing and Materials Management conducts monthly surveys of purchasing executives on their performance in the current month versus the previous period. Because the amount of materials ordered by purchasing managers parallels the level of manufacturing production, the PMI is a gauge of production growth. The results are indexed with a centerline of 50; values above 50 indicate expectations of expansion and values below 50 indicate expectations of contraction for the manufacturing sector.